Monday, January 28, 2013

Where was the Xmas “surge” in Retail Sales?

The CSO have released the December 2012 Retail Sales Index.  There is something missing from the data – the much heralded “surge” in retail sales that apparently took place around the Christmas period.  Here is the core retail sales index which excludes the Motor Trades.

Ex Motor Trades Index to November 2012

There was an increase in December but only marginally.  The trend in retail sales is up but this data do not reflect what was feted as “the best Christmas for retailers since 2007”.  Here it might be a little instructive to use the unadjusted series that just looks at the amount of retail sales without taking seasonal factors into account.  This chart has the unadjusted series for core retail sales (with December 2008 equal to 100).

Unadjusted Ex Motor Trades Index to December 2012

Unsurprisingly there is a spike in retail sales each December.  At 94.2, this year’s December peak was higher than each of the last two years (92.5 in 2010 and 93.3 in 2011 using the base in the chart) but was below both 2008 (100) and 2009 (94.7).

Maybe we are not looking in the right place.  It would be great if the CSO provided a resource that allowed us to create selected sub-indices from the categories provided.  The retail sales shown in the above charts include fuel, furniture, hardware, medicines and other categories which were likely excluded when Retail Excellence Ireland were making their seasonal claims.  These items only make up about one-fifth of the indices shown above so their effect is unlikely to be significant.

Although limited we can use one of the indices to check for the retail surge.  Non-food sales in Department Stores are only about 1/12th of the above indices but might be expected to reflect the broader pattern in Christmas shopping.  Here are the unadjusted series.

Unadjusted Department Stores to December 2012

That seems more like it.  The volume of non-food sales in Department Stores in December 2012 was indeed the highest since 2007.  In fact, volume was nearly 20% higher than 2008.  However, the value index was identical.  See here.  The adjusted series also shows a jump last month.

Unadjusted Department Stores to December 2012

And this also shows that the trend in sales in Department Stores has been positive since about April of last year.  However, apart from Department Stores it is hard to find evidence of the Christmas surge.  Sales in bars did jump 5% in December but the underlying trend in this sector is unmistakeable.

Aadjusted Bar Sales to December 2012

The retails sales of electrical goods (computers and peripherals, televisions, radios and DVD players, games consoles and software and telecommunications equipment) has been positive in recent months (in volume terms at least). 

Adjusted Electrical Goods Sales to December 2012

The recent jump was due to the digital switchover in October rather than any pre-Xmas exuberance.  Even still, the volume in this category in December was up 4% on last year, though the value of sales was down by around 1%.

It looks like the warning at the end of this post that “the plural of anecdote is not data” is borne out by the above data.


  1. I wonder if the 'surge' story was/is a story of 'Dublin vs the Rest'?

    The CSO don't split out retail sales by geography, obviously, but I wouldn't be surprised if any recovery gets a head start in Dublin (given the relative strength of the region's economy to most others in Ireland).

    So maybe the anecdotes tell us something's going on, we just can't break it out in the data unfortunately.

  2. On Christmas eve, I was down the barbers (or hairdressers!) and apart from chewing the bit about holidays and the weather, the talk was about the what an awful Christmas it was generally being for retailers. People were out shopping but were very careful about money spent, and there was more gawking than handing over hard cash. That's all anecdote of course, and it was hard to square that with Retail Excellence Ireland, bustling Dublin streets and trainloads from Northern Ireland escaping the poisoned unChristmassy atmostphere in NI's shared city centes.

    But we depend on the CSO to produce the overall national statistics.

    I think I know why Seamus excludes motor sales - with the distortion of previous schemes - but motor sales are retail and the revenue from car sales fuels multiplied income into the economy, just like the sale of TVs.

    So, is it not the case that the provisional figures are simply lousy, and just don't square with the high profile anecdote of those whose noble-enough job it is to instil confidence. And on the back of November 2012 figures, these numbers are just sobering. And with PRSI and children's allowance being cut from Jan 1st, the short term outlook looks weak.

    1. Hi Jagdip,

      I do exclude motor sales from the "core" measure of sales because they have such a distorting impact on the series, but also because the revenue isn't necessarily multiplied into the economy as you suggest. For a start, all new motor vehicles are imported.

      The purchase of vehicles makes up more than 80% of the Motor Trades category, which itself ranges from 35% (January) to 8% (December) of the overall index.

      A portion of many vehicle purchases are made with trade-ins rather than entirely with money. For example, consider someone with a €15,000 car who trades it in and buys a car worth €25,000.

      The retail sales index will reflect a sale of €25,000, whereas the person has a consumption expenditure of €10,000. The other €15,000 is simply a swap. Buying and selling cars does have added value and it does contribute to the economy but I think the size of the contribution is exaggerated by the size of the trade and the fact that many are done through (part-) exchange rather than through cash. See earlier discussion in [ASIDE] at the end of this post.

    2. Hi Seamus,
      I see what you’re saying but…
      I believe VAT and VRT make up about a third of the sale price of a typical (new) car. And then there is the margin at the garage which has to cover overheads, commission and profit. What? 10-20%? So maybe half of the sales price of a new car stays in Ireland.
      How is that any different to many electrical goods, clothes, food?

    3. Jagdip,

      I am not disputing that and agree that "[b]uying and selling cars does have added value and it does contribute to the economy". The point is whether the way the transactions are recorded accurately reflect what might be considered consumer behaviour.

      A chart of the volume indices for All Businesses and All Businesses ex. Motor Trades is here.

      Since 2010 the series are closely aligned but in 2008 and 2009 there are divergences. The change in Motor Tax and VRT in August 2008 made the summer 2008 Motor Trade figures bounce around. The collapse in new car sales in January 2009 saw that series plummet. There was a similar, though less pronounced, effect in January 2010.

    4. Perhaps I've seen suggestion of this on this blog before, but could it be that the lack/incompleteness of online sales data in the RSI composition explains some of the sobriety Jagdip observes?

      It will be interesting to see if the recovery in January consumer sentiment is matched by a sizable year-on-year pickup in the retail sales index - my hunch is it will be. Although I believe the anecdote about more gawking relative to actual spending, the allegedly strong January sales could show up better on high street and thus in the RSI than Christmas shopping, notwithstanding the potentially underestimated RSI.

    5. Well, a sizable year-on-year increase didn't materialise, though (excluding motor trades) the value index rose 0.9 and the volume by 0.7. These are not quite as high as the consumer sentiment recovery might have implied.

      The value index is marginally better than the previous 12-month average (96.6 compared to 96.4) but volume index is marginally lower (99.8 compared to 100.1).

      In any case, year-on-year value and volume changes (excluding motor trades) have been positive for every month since August despite another tough budget. Added to better QNHS numbers yesterday and the likely improvement to sentiment from the promissory note deal last week, and perhaps the talk of turning corners doesn't seem totally premature.

  3. An explanation of the divergence of anecdotes from the reality of the statistics could be the number of pubs, restaurants and shops which have closed down. The remaining players could be seeing a growth in sales in a flat-lining market.
    Xtra-vision could see their best Christmas ever in 2013 while HMV, Blockbuster, Game-stop have gone the way of the dodo